Company Registration in Switzerland
Switzerland is the heart of the global trade center, especially for the European Union. Starting a company in Switzerland will be beneficial because of its economic stability and the great financial environment. Switzerland is also well known for its effective international banking system. Switzerland also has introduced tax privileges to attract foreign investors. So the first key step to starting a business in Switzerland is to register your company. Below are the main steps on how to register your company.
Switzerland occupies the crossroads of Germanic and Romance Europe, as reflected in its four main linguistic and cultural regions: German, French, Italian, and Romansh. Although the majority of the population are German-speaking, Swiss national identity is rooted in a common historical background, shared values such as federalism and direct democracy, as well as Alpine symbolism. A developed country, it has the highest nominal wealth per adult and the eighth-highest per capita gross domestic product; it has been considered a tax haven. It ranks highly on some international metrics, including economic competitiveness and human development. Its cities such as Zürich, Geneva, and Basel rank among the highest in the world in terms of quality of life, albeit with some of the highest costs of living in the world. In 2020, IMD placed Switzerland first in attracting skilled workers. The WEF ranks it the fifth most competitive country globally.
The Swiss taxation system, legislative order, financial and economic systems have long been the standard for the whole world, and, as a consequence, the service of registration of companies in Switzerland is prevalent among non-residents. The process of business registration in the territory of Switzerland does not take much time but involves certain legal difficulties.
Recognize the business structure of your company
It is important to recognize what type of business structure of your company because it will have an impact on your legal and company taxes. So, you have to choose wisely and weigh the pros and cons of each decision
FORMS OF INCORPORATION
1.Limited Liability Company (GmbH)
The composition of the Board of Directors can consist of several people, but one of the participants shall be a resident of the country. There are no requirements concerning the citizenship of shareholders or investors. The authorized capital of the company cannot be less than 20 thousand in local currency. When registering a company in Switzerland, the capital shall be contributed before the moment of submission of the constituent documents.
Independent audit of the limited liability companies is not mandatory, but the company shall submit annual reporting forms filled in according to all the rules of the canton’s jurisdiction.
2.Joint-stock company (AG)
All directors, shareholders, and participants of the management are appointed by the founder. Employment for the post of the director of one resident of Switzerland is required. The citizen of the country shall be the natural person but is entitled to finance or act as the shareholder in other companies. The registration of a company in Switzerland in the form of AG requires the contribution of the authorized capital in the amount of 100 thousand to half a million Swiss francs. The indicated amount is paid immediately after the establishment of the business.
The authorized bodies shall receive annual reports concerning the maintenance of bookkeeping, as well as regarding turnover and income of the company. Independent audit is assigned individually, and the more employees are in the workforce and the higher is the level of turnover, the more likely is the assignment of the audit.
3.Branch of foreign company
Registration of business in Switzerland in accordance with this form is relevant for the extension of already existing business. Its founder is the head office of the company, and there are no requirements regarding the authorized capital. The mandatory requirement is that one of the participants of the management shall have a permanent place of residence in Switzerland.
Submission of reporting is necessary, but the audit is assigned only for the branches conducting certain types of activities. All details on the company's registration in Switzerland can be clarified with the specialists of Law & Trust.
Among the advantages of establishing a branch in comparison with the registration of the new company, there are the following:
- More efficient process of establishment requiring the collection of the considerably smaller documentation package.
- There are no state fees, and the level of the tax rate is much lower than for the new company.
- The company's income received abroad and in the territory of Switzerland will not be taxed, if the head office of the founder is registered in the country with which Switzerland has an agreement on preventing double taxation.
Setting up a business in Switzerland as a foreigner
You must be a Swiss resident to run a company either as a self-employed person (sole proprietorship and partnership companies) or as director/employee of a legal entity (corporations and limited liability companies). Read more about Swiss visas and permits.
Switzerland has a dual system for granting Swiss work permits to foreign workers. Employees from the EU/EFTA area can benefit from the Agreement on the Free Movement of Persons. Permits for people from countries outside the EU/EFTA area are only available in the highly qualified workforce, however.
Subsidiary Company Registration
Swiss subsidiary company is an independent company with an association with a foreign parent company. The parent company still holds the majority of the company shares and still has some control over the management. Most subsidiary companies are limited liability companies.
Choosing the company name
The legal status of the company name must be clearly shown in the name. For example, a limited liability company must have a Sociétéanonyme “SA” in the company name. The name must not be similar to any other registered company. You can check the existing company name on Switzerland’s commercial register office and the Central Business Names Index (Zefix).
Entries into the Commercial Registry
The first step of company registration is to open up a bank account and placing the paid-in capital. The bank will release the capital into the account upon registration. The bank fees are around CHF 200 to CHF 2000. Afterward, provide the public notary with the draft of the company’s articles of association. The registration applications form has to be filled out and all documents have to be authenticated. Signed The Stamp Declaration Form and the Lex Friedrich Declaration form (permit for foreigners to buy properties) and send them to the Register of Commerce.
Filed the company’s article of association with the Commercial Registry. This is to acquire the legal entity of the company. The cost for registration varies from CHF 600 to CH 10000 depending on the number of notarized signatures and shareholders. The registry will process the application between 5 to 9 days. The registry will announce the official registration in the Swiss Official Gazette of Commerce. The company becomes a legal entity on the day of the registration. Paid stamp tax at a bank or a post office.
VAT registration.
This procedure is to establish whether a company will be subjected to this tax. The VAT registration application can be done with the Federal Tax Administration after company registration. The minimum revenue for VAT registration is CHF 100 000 according to Art. 10 Paragraph 2 Lit. An of the “Bundesgesetz über die Mehrwertsteuer.
Employees Enrollment into the Social Insurance System
An application for registering employees in the insurance system will be sent by the Cantonal Social Security Office. The insurance systems cover retirement schemes, disabilities, occupational accidents, and pension and survivor's benefits.
How long does it take to establish a company, and how much does it cost?
After you have clarified everything from the business plan, legal structure, and company name to the residence permits and financing, you can launch your company. A detailed summary of the bureaucratic and legal steps to incorporate and also register a new legal entity in Switzerland has been compiled by the World Bank, including estimates of costs and timeline.
Recognition of self-employment by the AHV (Old Age and Survivors’ Insurance) is necessary when establishing a sole proprietorship or in the case of participation in a partnership. From a social insurance perspective, a natural person is considered self-employed if they:
- works in his/her own name and own account
- holds an independent position
- carries his/her own economic risk
As a rule, recognition of self-employment resides with the cantonal social insurance office. New immigrants must first get a valid residence and work permit.
Should you be unable to get social security recognition for the formation of a sole proprietorship, establishing a capital company (AG or GmbH) may be an alternative.
CONDITIONS OF DOING BUSINESS IN SWITZERLAND FOR NON-RESIDENTS
The citizen of any country can register a company in Switzerland. If the founder establishes a company but does not reside in Switzerland, he will need constant legal assistance. The availability of a representative with an actual address is mandatory, and it is possible to send company correspondence or personal information for the founder from local partners to this address.
The non-resident’s company is also registered at a certain legal address, which is indicated in all accompanying documentation.
The lawyers of Law & Trust offer clients all the services necessary for the successful registration of a company in Switzerland. At the preparatory stage, we carry out free consultations, analyze the current status of the applicant's company, and help with filling in the forms. The collection of documentation and its submission to the registrar is performed by the client's authorized representative from among the lawyers of our company.
After successful business registration in Switzerland, we offer legal and accounting support. All details are available on the website or can be specified during a personal consultation with the expert.